Thursday, September 11, 2014

Oil companies debt of GH¢1bn cause petrol shortage at pumps

The credit lines of most oil marketing
companies (OMCs) have been cut as a result of a GH¢1billion debt they
owe bulk oil distribution companies (BDCs).

The OMCs were in the past given a 30-day grace period to sell and pay
for the petroleum products they lifted from the storage depots of the
BDCs, but majority of the OMCs have, in the past, abused the credit line
by not paying back on time.

Therefore, the Chamber of Bulk Oil
Distributors (CBOD) has, with effect from September 2014, decided to
implement a “cash-and-carry” system to save its members from plunging
further into liquidity crisis.

At present, the government owes the BDCs GH¢1.3 billion.

An audit is being carried out into the debt.

Explaining
the rationale for the CBOD decision to the Daily Graphic, its Chief
Executive Officer, Mr Senyo Hosi, said only a few credit-worthy OMCs
existed and intimated that on a larger scale “it is cash and carry”.

We are restructuring

“We
are restructuring our business model in ways that will improve needed
liquidity to sustain supplies to the market and ultimately enable us to
serve consumers as required of us,” he pointed out.

He explained
that the current liquidity challenge facing the BDCs was as a result of a
general indebtedness to them by the OMCs and the government.

The
BDCs are faced with liquidity problems because seven out of 10 banks
have pulled out from pre-financing their activities as a result of their
indebtedness to those banks.

Another challenge confronting the
BDCs is the depreciation of the cedi and the high demand for foreign
exchange to import finished petroleum products.

Solution

Highlighting
the measures being instituted by the CBOD to resolve the numerous
financial challenges facing its members, Mr Hosi said his outfit had
decided to cut back on credit for non-paying OMCs, reduce credit
duration for some, as well as implement the cash-and-carry policy in
full.

“This has become necessary because if not checked, they
will compound the liquidity crisis the industry faces and in turn
negatively affect the ability of the BDCs to sustain supplies to the
consumer,” he intimated.

Touching on the effects the liquidity
challenges would have on the financial sector, he said, “The inherent
risk associated with any form of irresponsible credit behaviour has a
direct impact on the financial sector and the economy as a whole in ways
that may be irreparable.

“This is a $3-billion industry and so
you can imagine the effects any negative impact will have on consumers
and the banking industry as a whole.”

Fuel shortage

Meanwhile, there are reports of pockets of petroleum products shortage in some parts of Accra, reports Seth Bokpe.

A number of Goil fuel stations in Accra have run out of petrol, compelling attendants to turn away customers in need of fuel.

At
the Goil Fuel Station near the La General Hospital, an attendant told
the Daily Graphic that the station had run out of petrol since Tuesday.

There was, however, a delivery truck discharging diesel at the station.

At
the Kpeshie Lagoon Goil Fuel Station near the Labadi Beach Hotel, the
fuel attendants said the station had been out of petrol since the
morning but added that it was expecting some fuel later in the day.

At
the Goil station close to the Alajo Junction, the manager declined to
comment, but the attendants had earlier said they did not have petrol.

The
situation was not different at the Goil station at the Kwame Nkrumah
Circle, where the attendants said the station had been without petrol
for three days.

They could not tell when the station would receive its next consignment of fuel.

It
was the same story at the Goil station at Adabraka, near the Kojo
Thompson Road, where the attendants said there had been no fuel since
Tuesday.